Gold Seeker Issue # 55 ~ This Week in Mining: Some Reprieve for Gold Stocks

The mining stocks have started to decouple from the gold price. Generally speaking, the miners tend to lead gold and silver prices, which could mean we have put in a bottom in gold. However, there hasn't been a big enough rally in the mining stocks to come to this conclusion. It is important to tread lightly in case we do breach $1,670 and go to $1,650, $1,600 or even $1,550/oz. While this looks unlikely, it is possible, especially if the FED lets the 10yr yield continue to rise.

$ABRA.V, $AXU, $ARIS.TO, $ASM, $BTR.V, $AG, $FNV, $GATO, $GTT.V, $NEM, $LIO.V, $MUX, $NFG.V, $ROXG.TO, $VIPR.V, $WDO.TO, $WPM

AbraSilver Resources: Announced significant high-grade results from complete assays received for three drill holes and a partial assay for another hole. All of the holes drilled were designed to develop shallow oxide resources within the Whittle Pit area at Oculto at its Diablillos project in Argentina. Drill highlights include:

• 13.5m @ 31.1 g/t Ag and 2.93 g/t Au
• 6.5m @ 226 g/t Ag
• 2m @ 70.5 g/t Ag and 5.12 g/t Au
• 11.2m @ 222 g/t Ag
• 81m @ 381.9 g/t Ag and 2.12 g/t Au
• 6m @ 181 g/t Ag and 1.0 g/t Au

Alexco Resource: The company reported Q4 and 2020 financial results. Those are immaterial as Alexco produced the first concentrate in December 2020. Over the next several quarters, we will see sequential improvements in production, costs, and cash flow. Currently, the mill is feed fed from stockpiled material and ore from the narrow vein Bellekeno mine. In Q2, production will commence from Bermingham, followed by Flame & Moth in Q3. Alexco should undergo a market-rerating over the next 3-4 quarters as is typical. It wouldn't be surprising to see the company discuss a mill expansion beyond the small 400ktpd mill given the exploration upside at Flame and Moth, Bermingham, Onek/Luck Queen/Silver King/Elsa, and the numerous prospective targets in Keno Hill. Lastly, it would also make a lot of sense to expand its land package in Keno Hill and acquire Metallic Minerals' likes, which could provide additional sources of mill feed which aren't subject to the large silver stream held by Wheaton Precious Metals.

Aris Gold: Announced high-grade gold intercepts over broad widths at the Marmato mine in Colombia. The drill program, which began in May 2020, is approx. 50% complete. Thus far, drilling to date has demonstrated high-grade mineralization over broad widths, illustrating the potential to extend the 13yr mine life outlined in the PFS. The objective of the drill campaign is to upgrade resources, from Inferred to Indicated. In addition to the Deep zone, the campaign is testing newly discovered Fortaleza zones A and B to the north, which opens up a new area that will require further drilling to evaluate its potential. Drill highlights include:

• 16.3m @ 2.35 g/t Au
• 5m @ 3.35 g/t Au
• 21m @ 2.82 g/t Au
• 6.4m @ 3.61 g/t Au
• 6.8m @ 4.16 g/t Au
• 7.2m @ 3.68 g/t Au
• 30.8m @ 3.43 g/t Au

Avino Silver: The company announced a fully-funded increase in its 2021 drill program, from 12,000m to 30,600m. The increase in drilling will be focused on Phase II and III and the PEA-recommended drilling on the Oxide tailings project.

Bonterra Resources: The company announced an update regarding the ongoing permitting to expand the Bachelor mill from 800tpd to 2,400tpd. The company estimates the permitting process for the mill expansion if 2/3^rd's complete. Bonterra believes the mill should be permitted for expansion concurrently with the development of Moroy, Bachelor, and Barry (and eventually Gladiator) for a potential hub-and-spoke restart.

First Majestic: Announced it has agreed with Eric Sprott whereby First Majestic will acquire all of the outstanding shares of Sprott Mining for $470m (in common stock) and 5m purchase warrants for its Jerritt Canyon mine in Nevada. First Majestic, which already trades with a premium, could receive an even higher multiple given the addition of more gold to its production profile, increase in its dividend (equivalent to 1% of net revenue), and diversification out of Mexico.

Currently, the Jerritt Canyon mine operates at 2,200tpd, although there is relatively significant upside potential on both the production and cost side. The processing plant has a capacity of 4,500tpd. The mine currently operates as an underground mine and has one of three permitted gold processing plants in Nevada that uses roasting in its ore treatment. In 2020. In 2020, the operation produced 112k oz. Au. With two near-term brownfields projects, the company can increase production significantly.

Franco-Nevada: The largest royalty and streaming company (by market capitalization), not free cash flow generation, announced strong Q4 and full 2020 results. The company also announced two acquisitions to increase its growth projects. In Q4, Franco sold 147k AuEq oz. and 521.56k AuEq oz. for the full-year 2020. Franco is debt-free with $1.9B in available capital. In 2020, Franco generated over $800m in operating cash flow. The company also announced it had increased its dividend by 15.40% to $0.30/share.

In 2021, attributable royalty and stream production/sales of 555-585k AuEq oz. and additional revenue of $115-$135m from its energy assets. Franco also provided a 5yr outlook in which it expected to produce 600-630 AuEq oz. by 2025 and additional revenue of $150-$170m from its energy assets.

On December 29, 2020, Franco acquired a royalty portfolio in the Haynesville natural gas play, in Texas, from Mesa Minerals Partners, for $135m. The royalties generated revenue of $4.2m in Q4, providing immediate cash flow and increasing the weighting of natural gas (vs. oil) within its energy portfolio. On March 8, 2021, Franco closed a $165m precious metals stream with reference to the gold and silver production from the Condestable mine, an operating underground copper-gold-silver mine near Lima, Peru. Effective January 1, 2021, Franco will receive deliveries of 8,760 oz. Au and 291k oz. Ag annually until December 31, 2025, followed thereafter by variable deliveries based on a percentage of gold and silver in concentrate. Franco will pay 20% of the spot price for gold and silver for each ounce delivered under the stream.

Gatos Silver: Announced it had increased its interest in the Los Gatos JV and the hectare concession block (>85% unexplored) by 18.50% from 51.50% to 70%. This is important, and the land package has district-scale potential. Cerro Los Gatos is a large, high-grade, low-cost silver mine with expansion potential, 25% in the short-term to 3ktpd. At 2.5ktpd, it is expected to produce 12.2m AgEq oz. annually. Furthermore, Gatos Silver's land package extends beyond the JV property and highly prospective. Drilling has commenced at its Santa Valeria project, which is 5km east of the Los Gatos JV concession. Santa Valeria appears to have a similar geological setting to the Cerro Los Gatos deposit. An initial 18-hole, 5,400m drilling program is planned to test high-priority targets.

GT Gold: Newmont agreed to acquire all of the outstanding shares that it didn’t already own of C$3.25/share in cash. The total equity value pursuant to the transaction is approx. C$456m (fully diluted). This represents a premium of 38% to the 20-day VWAP of GT’s shares of March 9, 2021. The bid to acquire GT Gold is getting strong shareholder support, including Ross Beaty, The K2 Principal Fund, and Muddy Waters, which represent approx. 43% of the outstanding shares. Adding GT’s Tatogga project increases Newmont’s presence in the Golden Triangle, together with the Coffee project.

Lion One Metals: The company announced the delivery and mobilization of two new drilling rigs and continued high-grade results from surface drilling and underground channel sampling. The two new rigs have a 1,000m depth capacity and can be utilized from surface or underground. This is important to delineate resources exceeding depths of 1.2km's at what is believed to be an alkaline deposit. Drill results from drill hole TUDDH521 include:

• 0.13m @ 51. 69 g/t Au (from 57.6m)
• 1.87m @ 8.17 g/t Au (from 69.7m)
• 1.98m @ 8.52 g/t Au (from 74m)
• 3.50m @ 5.30 g/t Au (from 78.5m)

McEwen Mining: Reported full-year 2020 financial results and provided its 2021 outlook. McEwen production 114.8 AuEq (down from 174k AuEq oz.) in 2020. The company lost money in 2020, with negative operating cash flow of $28m, although the higher gold price environment stopped the bleeding to a degree. In 2021, production is forecast to be 141-160k AuEq oz. There are some projects to be excited about going forward, notably Las Azules, Black Fox, San Jose, and Phase II of the Fenix project.  (due to rising silver prices). In the earnings release, the company also noted the significant value that

could be unlocked by spinning out its silver assets into a new company (San Jose and Fenix) and Los Azules into another.

New Found Gold: Released partial assay results from intervals in five holes at the Keats zone at its Queensway project. Highlights include:

• 30.1m @ 27 g/t Au
• 46m @ 24 g/t Au (broadest high-grade interval to date at Keats)
• 2.5m @ 21.9 g/t Au

Roxgold: Exploration success continues as its development project, Seguela, is expected to achieve production before year-end 2022. The company announced assay results from the down-plunge extension drilling below the high-grade deposit, Koula. As we noted to Goldseeker.com  subscribers, the continued expansion at Koula (and other areas) was likely to increase average annual production over a longer mine-life. The company believes Seguela will become a 150k oz. Au producer over 10+ years at low-costs. We believe there is more upside from a production and mine life standpoint, but we will have to wait and see. Drill highlights in the release from RC and RD drilling include:

• 16m @ 26.50 g/t Au
• 15m @ 18.50 g/t Au
• 7m @ 22.30 g/t Au
• 17m @ 7.70 g/t Au 

Silver Viper Minerals: Released the results from a new drill hole at La Virginia, located 50m south of the previously reported drill hole. The company drilled 1m @ 491 g/t Ag and 10.3 g/t Au and 1m @ 351 g/t Ag and 11.1 g/t Au within a 28m (20.1m true width @ 88 g/t Ag and 2.34 g/t Au) long mineralized interval. The new interval represents an extension to the south of the El Rubi structure and is the deepest intercept to date.

Wesdome Gold Mines: Announced Q4 and full-year 2020 results. In 2020, Wesdome produced 90.2k oz. Au and generated free cash flow of $29m, net of investing $40.5m (OCF of $69.5m) into the Kiena Complex, a 332% increase over 2019.

Wheaton Precious Metals: Reported very solid Q4 and full-year 2020 results. Wheaton generated over $1b in revenue in 2020 and $765m in operating cash flow, both of which were records for the company. Wheaton generated $208m in operating cash flow in Q4. The company also reduced net debt by $275m in Q4, leaving the company with a net debt position of $2m. 2020 was highlighted by higher cash flow generated from gold streams and silver streams and entering into two new precious metals agreements. Total attributable gold M&I resources increased by 64% due to Vale having exploration success at Salobo, which extended the orebody at depth. At year-end, the Salobo Phase III expansion was 68% complete. Wheaton will see growth in 2021 from Keno Hill, Cozamin, Voisey's Bay, and Constancia.